July 23, 2019

Effects of the Brazilian Social Security Reform in front of a billion-dollar deficit

topic:	Humans
located:	Brazil
editor:	Ellen Nemitz

Brazil is aging. Only 10 percent of the population was over 60 in 2010, but this amount has increased to 13 percent by 2018 and is expected to be 32 percent by 2060, according to national statistics. Meanwhile, the amount of young people is expected to decrease in the same period.

Based on these data and claiming a billion-dollar deficit in the Brazilian Social Security System (MPS), economic experts say that the country needs to reform the MPS in order to retire people later and to pay lower pensions. Even though this is not an exclusive claim from Jair Bolsonaro's government, it was his economy minister, Paulo Guedes, who prepared the bill that is now being voted by the Congress.

Changes are being requested even by foreign investors, saying that Brazil’s economy needs to save money in order to resume growth – currently there are more than 13 million unemployed workers and GDP growth was close to 1 percent in 2018; for this year, forecasts point to less than 1 percent growth.

The reform voted by the Congress on July 12 – there is still a second session in Congress and the Senate voting – is different from the original bill and guarantees a minimum wage for everyone, including vulnerable elderly and people with disabilities. On the other hand, pensions paid after a worker’s death or permanent disablement could be lower than the national minimum wage, which is now less than 300 dollars.

After the approval of the reform, women will have to work until 62 years old and men until 65, with at least 15 years of contribution for women and 20 for men. However, by working 15 or 20 years, the person will receive only 60 percent of the average of all salaries throughout their life (guaranteed the minimum wage) and, in order to receive 10 percent, it is necessary to work 35 years for women, and 40 years for men., Although the minimum age range is not so different in the current model, there is a possibility of retirement by contributing for a minimum period of 30 or 35 years, depending on the gender, which gives the workers the chance to retire before the age of 65.

Image: Daniel Zanini H., flickr